Incentives for First-Time Homebuyers

Tim Lyon • June 11, 2025

There are a lot of programs and incentives for first-time homebuyers, but it can be hard to keep track of them all.

Each one has its own rules, limits, and fine print—which makes it easy to feel confused or overlook something valuable.


In this post, I’ll break everything down clearly so you understand exactly what’s available and make sure you’re not missing out on any savings.


What Counts as a First-Time Homebuyer?

Before getting into the incentives, it helps to know what “first-time homebuyer” means for most of these programs:

  • You (or your spouse/common-law partner) haven’t owned a home that was your principal residence in the current year or in the 4 previous calendar years.
  • You plan to live in the home as your principal residence.

(Provincial/local programs may have additional or slightly different requirements.)


Federal Incentives for First-Time Homebuyers

1. First Home Savings Account (FHSA)

A registered account that combines the best of an RRSP and TFSA: contributions are tax-deductible, and withdrawals for your first home (including investment growth) are tax-free.

  • Annual limit: $8,000
  • Lifetime limit: $40,000
  • Unused annual room carries forward, so if you don’t contribute the full $8,000 in one year, you can catch up later.
  • Funds must be used within 15 years of opening the account or before age 71.


Important Note: Can be stacked with the Home Buyers’ Plan (HBP).


2. Home Buyers’ Plan (HBP)

Withdraw up to $60,000 from your RRSP to buy or build a qualifying home.

  • Repayment: spread over 15 years, starting the second year after withdrawal.
  • Contributions don’t affect your regular RRSP deduction limit if designated as HBP repayments.


3. GST/HST New Housing Rebate (First-Time Buyers GST Rebate – New in 2025)

For new or substantially renovated homes, first-time buyers may be eligible for a full or partial rebate on GST or the federal portion of HST.

  • Full rebate: Homes valued up to $1 million
  • Partial rebate: Homes between $1 million–$1.5 million (phased out linearly)
  • No rebate: Homes above $1.5 million
  • Potential savings: up to $50,000


Important Note: The federal government has announced this program, but as of now, we don’t yet have final details on how it will work in practice. More guidance is expected.


4. 30-Year Amortization for First-Time Buyers of Insured Mortgages

As of 2025, all first-time buyers with insured mortgages (less than 20% down) may qualify for a 30-year amortization.

  • Benefit: Lower monthly payments allowing for better cashflow or more purchasing power
  • Trade-off: More total interest paid over time


5. Home Buyers’ Amount (First-Time Home Buyers’ Tax Credit)

A non-refundable federal tax credit to help with closing costs such as legal fees, inspections, and appraisals.

  • Maximum claim: $10,000
  • Value: up to $1,500 back at tax time.


Provincial Incentive – British Columbia

First-Time Home Buyers’ Program (Property Transfer Tax Exemption)

In BC, first-time homebuyers may qualify for a full or partial exemption from the Property Transfer Tax (PTT).

  • What is PTT?
  • 1% on the first $200,000 of fair market value (FMV)
  • 2% on FMV between $200,000–$2,000,000
  • 3% on FMV above $2,000,000
  • Exemptions:
  • Full exemption if FMV is $500,000 or less
  • Partial exemption between $500,000–$835,000
  • No exemption if FMV is $860,000 or more
  • Eligibility Criteria:
  • Canadian citizen or permanent resident
  • Filed at least 2 income tax returns as a BC resident in the last 6 years
  • Never previously owned a principal residence anywhere in the world
  • Must move in and make the property your principal residence

This program alone can save buyers up to $8,000 on closing costs.


Real-World Example

Let’s say you’re buying a $800,000 home in BC:

  • You use your FHSA savings, withdrawn tax-free.
  • You withdraw $40,000 from your RRSP under the Home Buyers’ Plan.
  • You save $8,000 on BC’s property transfer tax (since the home is above $500,000 but below $860,000).
  • You also claim the Home Buyers’ Tax Credit = $1,500.


Total savings: Tens of thousands between rebates, exemptions, and tax advantages—bringing homeownership closer within reach.


Potential Savings – At a Glance

Quick Summary

  • FHSA: Save up to $40,000, tax-deductible in, tax-free out
  • HBP: Withdraw up to $60,000 from RRSP, repay over 15 years
  • Home Buyers’ Tax Credit: Up to $1,500 tax reduction
  • GST Rebate: Up to $50,000 on new builds under $1.5M (pending details)
  • 30-Year Amortization: Lower monthly payments on insured mortgages for all FTHBs
  • BC PTT Exemption: Up to $8,000 in tax savings


Next Steps

  1. Check eligibility: Federal vs BC programs differ slightly.
  2. Plan savings early: Use FHSA + RRSP contributions strategically.
  3. Run the numbers: GST rebate and PTT thresholds can make or break affordability.
  4. Talk with a mortgage broker: Ensure you’re combining incentives properly and not leaving money on the table.


Need help navigating these programs? Book a consultation or call 778-988-8409.


Mortgage Term Glossary

Amortization: The total length of time to fully repay your mortgage (typically 25–30 years).

Down Payment: The upfront amount you pay toward the purchase price of a home, typically expressed as a percentage of the total price.

Equity: The difference between your home’s value and your outstanding mortgage balance.

FHSA (First Home Savings Account): A registered plan that allows tax-deductible contributions and tax-free withdrawals for your first home.

GST Rebate: A federal rebate for first-time buyers of new or substantially renovated homes, providing up to $50,000 back (pending government guidance).

HBP (Home Buyers’ Plan): A program allowing you to withdraw up to $60,000 from your RRSP for a down payment, repayable over 15 years.

Mortgage Term: The contract period for your mortgage rate and conditions (usually 1–5 years).

PTT (Property Transfer Tax): A provincial tax charged in BC when registering your home’s title; exemptions are available for first-time buyers.

RRSP (Registered Retirement Savings Plan): A registered savings plan where contributions are tax-deductible and investment growth is tax-deferred.

Tim Lyon

Mortgage Consultant

Everything You Need to Know About Second Mortgages

By Tim Lyon • October 2, 2025
What Is a Second Mortgage, Really? (It’s Not What Most People Think) If you’ve heard the term “second mortgage” and assumed it refers to the next mortgage you take out after your first one ends, you’re not alone. It’s a common misconception—but the reality is a bit different. A second mortgage isn’t about the order of mortgages over time. It’s actually about the number of loans secured against a single property —at the same time. So, What Exactly Is a Second Mortgage? When you first buy a home, your mortgage is registered on the property in first position . This simply means your lender has the primary legal claim to your property if you ever sell it or default. A second mortgage is another loan that’s added on top of your existing mortgage. It’s registered in second position , meaning the lender only gets paid out after the first mortgage is settled. If you sell your home, any proceeds go toward paying off the first mortgage first, then the second one, and any remaining equity is yours. It’s important to note: You still keep your original mortgage and keep making payments on it —the second mortgage is an entirely separate agreement layered on top. Why Would Anyone Take Out a Second Mortgage? There are a few good reasons homeowners choose this route: You want to tap into your home equity without refinancing your existing mortgage. Your current mortgage has great terms (like a low interest rate), and breaking it would trigger hefty penalties. You need access to funds quickly , and a second mortgage is faster and more flexible than refinancing. One common use? Debt consolidation . If you’re juggling high-interest credit card or personal loan debt, a second mortgage can help reduce your overall interest costs and improve monthly cash flow. Is a Second Mortgage Right for You? A second mortgage can be a smart solution in the right situation—but it’s not always the best move. It depends on your current mortgage terms, your equity, and your financial goals. If you’re curious about how a second mortgage could work for your situation—or if you’re considering your options to improve cash flow or access equity—let’s talk. I’d be happy to walk you through it and help you explore the right path forward. Reach out anytime—we’ll figure it out together.

How Mortgage Rates Work: Fixed vs. Variable

By Tim Lyon • September 26, 2025
What affects mortgage rates? Does the Bank of Canada rate affect fixed-rate mortgages? These are questions that come up all the time, so in this this post, I’ll explain how fixed and variable rates are determined, why they don’t always move together, and what that means for you as a borrower. But to start with the short answer: While Bank of Canada announcements immediately impact variable rates, fixed rates usually have those expectations already baked in long before the announcement. That’s because fixed rates are forward-looking — they reflect where markets think rates are headed, not just where they are today. What Are Fixed and Variable Rates? Fixed Rate The interest rate stays the same for the entire mortgage term. Payments remain consistent, no matter what happens in the market. Variable Rate The interest rate changes during the mortgage term, moving up or down depending on the lender’s prime rate. Payments may stay the same (VRM) or change (ARM). How Do Fixed Rates Work? When you choose a fixed rate, the lender is guaranteeing your rate for the length of your term . To do this, they need to estimate what a fair rate will be over that time. This makes fixed rates more forward-looking — they often reflect not just today’s conditions, but also what the market expects to happen in the future. Key Points About Fixed Rates Strongly influenced by the Canadian bond market (especially the 5-year government bond yield). Lenders adjust their fixed rates based on investor expectations for inflation and future interest rates. Often, Bank of Canada moves are already baked into fixed rates before they happen. Example If bond yields suggest that rates will rise in the next year, lenders may increase fixed rates now, even if the Bank of Canada hasn’t made a move yet. How Do Variable Rates Work? Variable rates move directly with the Bank of Canada’s overnight rate. When the Bank of Canada raises or lowers its rate, lenders adjust their prime rate accordingly, and variable mortgages follow. For borrowers, the most important detail is the discount from prime , because that sets the actual rate you pay. For example, if prime is 4.95% and your mortgage is Prime – 0.5%, your rate is 4.45%. The discounts lenders offer change over time. In periods of economic uncertainty, lenders usually shrink the discount they offer, which can make new variable mortgages less attractive even if prime is coming down. Key Points About Variable Rates Directly tied to the Bank of Canada’s overnight rate, which is reviewed eight times a year. Banks adjust their prime rate in response to these moves. Your actual rate = Prime – discount (e.g., Prime – 0.5%). Example If prime is 4.95% and your mortgage is Prime – 0.5%, your rate is 4.45%. If the Bank of Canada cuts rates by 0.25%, prime drops to 4.70%, and your rate automatically drops to 4.20%. Why Don’t Fixed and Variable Always Move Together? Fixed rates reflect the bond market, which looks ahead at where rates and inflation may go. Variable rates respond directly to Bank of Canada decisions, reflecting current conditions. This is why fixed rates can fall while variable rates stay flat, or vice versa. Next Steps If you’re deciding between fixed and variable, understanding how each is set is the first step. The next is to match the right mortgage type to your budget and comfort with risk. If you’d like to review which option works best for you, I’d be happy to help. Need help with your mortgage? Book a consultation or call 778-988-8409 . Mortgage Term Glossary Amortization: The total length of time it will take to pay off your mortgage completely (typically 25–30 years in Canada). Bond Yield: The return investors get from government bonds. Used as a benchmark for fixed mortgage rates. Discount (Variable Rate): The amount subtracted from prime to determine your actual mortgage rate. Fixed Rate: An interest rate that stays the same for the entire mortgage term. Mortgage Term: The length of your mortgage contract with your lender (typically 1–5 years), after which you need to renew. Overnight Rate: The interest rate at which major banks borrow and lend money to each other, set by the Bank of Canada. Prime Rate: The interest rate banks use as a baseline for loans, influenced by the Bank of Canada’s overnight rate. Variable Rate: An interest rate that changes during your mortgage term based on lender prime rates.